The Yankees, the Mob, and the Two-Headed Bailout

While one city's mayor finds bailout blocking downright moronic, another city's baseball franchise finds a way to crush lower-class infrastructure. What gives? More partisan politics in the economic stimulus fight.

Writer-at-large John H. Richardson's column, "The Richardson Report," runs right here each Tuesday.

After eight years of privatizing our government like giddy little schoolgirls, America is entering a new era: the era of the public-private partnership.

The first glimmer came last week, when Republican senator Mitch McConnell chose a plan by the city of Las Vegas to build a new "mob museum" — at the cost of some $50 million — as a laugh line in his attack on the bailout. This might suggest that there are clear ideological differences between the 'Pubs and the 'Dems on this issue.

Let's start with Las Vegas mayor Oscar B. Goodman:

First, tell us why the mob museum would be a good thing for Las Vegas.

It's not a good thing for Las Vegas — it's a great thing for Las Vegas. When we started renovating the building, we were approached by a California developer to team up with the Lady Luck Casino to replicate, to some extent, the Third Street Promenade in Santa Monica, a phenomenally successful real estate venture. It will be a centerpiece of our redevelopment efforts.

Can you put a number on it?

Polling says 250,000 people will visit it each year. Also, the Convention Authority is excited about having another venue that attracts people to Las Vegas.

Can you put a dollar number on it?

At $15 to $20 a ticket, I guess the math is it would bring in $4 million a year.

And associated revenues?

When I retire, I want the concession for the T-shirts and sweatshirts.

Do you have that locked in already?

No, unfortunately.

But if this is such a great idea, why can't private industry do it?

That's what the Main Street stimulus program is all about. President Obama wants to get people working right away, and we're ready to go. It would have a tremendous development effect, it would provide plenty of jobs, and it would bring people into our downtown.

But again, why should taxpayers from Ohio or North Carolina pay for it? That's what the Republicans like McConnell are saying.

And I don't want to pay for their roads. It's a stupid argument. It's just because they're ignorant.

[Laughter]

No, they're morons. There are a couple that have some common sense, but not that many, that's for damn sure.

So you think the federal government should be helping Las Vegas?

Of course they should. They want to put people to work, they want to create jobs, and they want to get this thing going right away instead of talking about it for the next five years.

What about the argument that only private industry creates jobs?

Not in Las Vegas, not in the area I'm talking about. These public-private partnerships are phenomenally successful. We diversified our economy overnight down here with the World Market Center, which is a 12-million-square-foot project for the furniture industry, we built a new discount mall — that's what happens in these major cities whose infrastructure has rotted. We give certain benefits to make it pleasing for these folks to do business in an area that, if you didn't do it, would become blighted.

On the other hand, consider Yankee Stadium. I first started following this story three years ago, when a tireless watchdog of New York's parks named Geoffrey Croft — he runs a group called New York City Park Advocates — called to tell me that the Yankees were planning to build their new stadium on the backs of some of the poorest people in America. Specifically, they were going to build it on two rare and precious parks in the South Bronx, replacing them with "park-like structures" on top of parking garages.

Three years later, the story seems much worse. According to New York state congressman named Richard Brodsky, who has been leading a lengthy investigation, the Yankees and the government of New York gamed the system with a series of false promises. For example, the Yankees and the administrations of Governor George Pataki and Mayor Michael Bloomberg promised a thousand permanent jobs. Brodsky says there are only fifteen.

The pols claimed the Yankees would "pay for the entire cost of construction including any cost overruns," according to a City of New York press release. But Brodsky says the construction was actually paid for almost entirely by New York state taxpayers through something called "payments in lieu of taxation." Either way, the taxpayers are out a billion dollars.

"None of what they said was true," Brodsky told me.

Supposedly, New York spent all this money because of a threat by the Yankees to move somewhere else. But Brodsky says the city made no documented efforts "to asses the actual threat, and presented no evidence that the Yankees had a financially and politically practical relocation site."

Beyond this are a whole host of complicated back deals and funny business as detailed in Brodsky's preliminary report, most of which seem to have been baldly crafted by sophisticated lawyers to get around the rules the city and the IRS put in place to prevent deals exactly like this, where the public pays and privateers profit. It seems the New York City Independent Budget Office was right when it warned in 2006 that "there is little reason to expect much gain in local economic activity beyond the three-year construction period...because a large share of sports business income flows to a relatively small number of players and owners, few of whom reside in the city."

On top of all that, the Yankees had the nerve to come forward — right after they paid $243.5 million for two players to ask the city for another $399 million to "complete" the project, including such crucial items as a $10.7 million new jumbotron. And they'll probably get it. "We can't fund our schools, we can't fund the subways, but we found $2 billion for one of the richest teams in the world," says Brodsky.

And those "park-like" structures? Croft says that here, too, the gall of the Yankees was almost limitless. For instance, the total acreage of replacement parks includes 1.3 acres for a pedestrian walkway to the new park-like structures, some of which are a mile and a half away. "The community is losing more than four acres of parkland, and they did it on the backs of poor people," he says.

So why did Senator McConnell single out Mayor Goodman's piddly little $50 million museum instead of the vastly more expensive Yankee deal? Here's a few clues:

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